FY2021 Q1 Financial Results

FY2021 Q1 Financial Results

August 5, 2021Furukawa Electric Co., Ltd.

Director, Corporate Senior Vice President, and General Manager of the Finance & Global Management

Akihiro Fukunaga

This presentation materials are created for the purpose of providing information on Furukawa Electric’s activities for shareholders, investors, and members of the media.

Forward-Looking StatementsProjections of future sales and earnings in these materials are “forward-looking statements.”Management offers these projections in good faith and on the basis of information presently available. Information in these statements reflects assumptions about such variables as economic trends and currency exchange rates. Forward-looking statements incorporate known and unknown risks as well as other uncertainties that include, but are not limited to, the following items. • Economic trends in the U.S, Europe, Japan and elsewhere in Asia, particularly with regard to consumer spending and corporate expenditures. • Changes in exchange rates of the U.S. dollar, euro, and Asian currencies. • Furukawa Electric Group’s ability to respond to rapid advances in technology. • Changes in assumptions involving financial and managerial maters and the operating environment. • Current and future trade restrictions and related matters in foreign countries. • Changes in the market value of securities held by the Furukawa Electric Group.

Due to the above factors, actual sales, earnings, and other operating results may differ significantly from Looking Statements in these materials. In addition, following the release of these materials, Furukawa Electric Group assumes no obligation to announce any revisions to forward-looking statement in these materials.

CopyrightsFurukawa Electric Co., Ltd. retains copyrights and other rights involving these materials. Copyright and otherwise reusing these materials in any way without prior consent is prohibited.

FY2021 Q1 Results Highlights

3All Rights Reserved, Copyright© FURUKAWA ELECTRIC CO., LTD. 2021

（JPY billion）

FY19_Q1 FY20_Q1 FY21_Q1 YoYchange

a b ｃ c-b

Net Sales 226.3 176.5 218.8 +42.3

Operating income 4.9 ▲ 1.2 3.8 +5.0

Ordinary income 3.9 ▲ 1.5 5.8 +7.3Net income attributable toowners of the parent 2.3 7.8 4.2 ▲ 3.6

■Net sales and operating incomeIncreased profit on higher revenue*1 in all segments

■Ordinary incomeIncreased following higher operating income and improved profit/loss in equity method affiliates

■Net income attributable to owners of the parent companyNet income attributable to owners of the parent company was JPY 4.2 billion following lower extraordinary income and loss (JPY 13.7→JPY 1.8 billion)*2

*2 FY20_Q1 extraordinary income:JPY 22.1 billion gain on disposal of non-current assets

*1 Impact of higher copper prices: Approx. JPY +19.5 billion (JPY 616/kg→ JPY 1,104/kg）Impact of the adoption of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29): Approx. JPY ▲8.8 billion

FY19 FY20 FY21Q1 Q1 Q1a b c c-b

Net sales 226.3 176.5 218.8 +42.3 +42.3 (+24%)See page 5

Operating income 4.9 ▲ 1.2 3.8 +5.0（Margin） 2.2% ▲ 0.7% 1.7% +2.4

Profit / loss in equity method affiliates ▲ 0.3 0.0 2.1 +2.1Foreign exchange gain / loss ▲ 0.4 0.1 0.2 +0.1

Ordinary income 3.9 ▲ 1.5 5.8 +7.3 +7.3

（Margin） 1.7% ▲ 0.8% 2.7% +3.5

Extraordinary income / loss 0.4 13.7 1.8 ▲ 11.9

Income taxes 2.2 4.0 2.9 ▲ 1.2

Net income attributable to non-controlling interests ▲ 0.2 0.4 0.5 +0.1

Net income attributable to owners ofparent 2.3 7.8 4.2 ▲ 3.6 ▲3.6 (▲46%)

（Margin） 1.0% 4.4% 1.9% ▲ 2.5

Average copper price 717 616 1,104 －Average exhange rate 110 108 110 －

YoYchange

・Extraordinary income ▲20.4 (22.9 → 2.5)・Extraordinary loss +8.4 (▲9.2 → ▲0.7)

Breakdown of change（Q1）

+5.0See page 6

FY2021 Q1 Results – P/L Summary


■There is no change to the full-year forecasts.

*Announced on May 12, 2021

d

880.0

26.03.0%－－

24.02.7%

▲ 3.5

－

－

12.0

1.4%

1,000105

FY21forecasts

（JPY billion, JPY/kg, JPY/USD）

Extraordinary income：・Social contribution refund for prior periods

(1.7 : Q1)・Gain on the disposal of non-current

assets (0.6 : Q1)

＋19.5

＋1.7 ＋30.3▲0.4 ▲8.8

176.5

218.8

50.0

150.0

250.0

FY20_Q1 Fluctuationin price of

unprocessedmetals

Foreignexchange

Impact of changein scope of

consolidation

Impact ofthe new

accountingstandards*

Realchange

FY21_Q1

Analysis of Change in Net Sales (YoY)


(JPY billion)

0

＋42.3

*The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) has been adopted from the fiscal year ending March 31, 2022

Analysis of Changes in Operating Income (YoY)


0

＋5.0

Higher net sales, changes in the product mix, reduced cost of manufacturing, etc.: Approx. + JPY 8.0 billionImpact of higher material expenses and soaring transportation expenses: Approx.▲ JPY 1.5 billionHigher fixed costs and expenses (excluding depreciation & amortization expenses and R&D expenses): Approx. ▲ JPY 1.5 billion(JPY billion)

Net Sales and Operating Income by Segment


【Reference】Net sales based on the old accounting standards

■There is no change to the full-year forecasts.（JPY billion）

FY19 FY20 FY21 YoY Results Results Results Change

a ｂｃ c-b

67.7 56.2 69.8 +13.5

Communications Solutions 40.2 36.3 44.8 +8.5

Energy infrastructure 27.5 20.0 25.0 +5.0

128.0 92.5 118.2 +25.7

Automotive Products & Batteries 60.7 51.5 58.8 +7.3

Electronics Component Materials 67.4 41.0 59.4 +18.4

29.4 25.7 29.9 +4.3

12.3 10.3 10.5 +0.2

▲ 11.2 ▲ 8.2 ▲ 9.6 ▲ 1.4

226.3 176.5 218.8 +42.3

▲ 0.4 ▲ 0.1 0.3 +0.3

Communications Solutions 0.1 0.2 0.0 ▲ 0.1

Energy infrastructure ▲ 0.4 ▲ 0.2 0.2 +0.5

3.5 ▲ 1.8 1.9 +3.7

Automotive Products & Batteries 2.7 ▲ 1.8 0.8 +2.6

Electronics Component Materials 0.8 ▲ 0.0 1.1 +1.1

1.9 1.1 2.0 +0.9

▲ 0.1 ▲ 0.4 ▲ 0.3 +0.1

▲ 0.1 0.0 ▲ 0.1 ▲ 0.1

4.9 ▲ 1.2 3.8 +5.0

Net sales

Infrastructure

Electronics & Automotive Systems

Functional Products

Service and Developments, etc.

Elimination of intra-company transactions

Total

Operating income

Infrastructure

Electronics & Automotive Systems

Functional Products


Elimination of intra-company transactions

Total

Q1FY19 FY20 FY21 YoY

Results Results Forecasts Changea b c c-b

280.9 259.2 280.0 +20.8

166.4 158.3 175.0 +16.7

114.5 100.9 105.0 +4.1

509.3 433.0 480.0 +47.0

257.6 235.1 260.0 +24.9

251.7 198.0 220.0 +22.0

115.9 114.7 115.0 +0.3

50.3 38.7 37.0 ▲ 1.7

▲ 42.0 ▲ 34.0 ▲ 32.0 +2.0

914.4 811.6 880.0 +68.4

1.7 ▲ 2.1 5.5 +7.6

1.6 ▲ 0.2 4.5 +4.7

0.1 ▲ 1.9 1.0 +2.9

14.8 5.9 14.0 +8.1

10.9 5.0 12.0 +7.0

3.9 0.9 2.0 +1.1

7.5 6.3 9.0 +2.7

▲ 0.3 ▲ 1.7 ▲ 2.5 ▲ 0.8

▲ 0.1 0.1 0.0 ▲ 0.1

23.6 8.4 26.0 +17.6

Full year

FY21 YoYForecasts Change

c’ c’-b

288.2 +29.0176.5 +18.2

111.7 +10.8

512.6 +79.6264.4 +29.3

248.2 +50.2

124.0 +9.337.4 ▲ 1.3

▲ 32.0 +2.0

930.2 +118.6

Full year

【Reference】Net sales based on the old accounting standards

FY21 YoYForecasts Change

ｃ’ c’-b

71.4 +15.144.8 +8.6

26.5 +6.6

123.9 +31.460.8 +9.3

63.1 +22.1

31.6 +5.910.3 ▲ 0.0

▲ 9.6 ▲ 1.4

227.6 +51.0

Q1


Intentionally Blank


FY21_Q1 Results


FY21_Forecasts

*based on the old accounting standards: JPY 44.8 billion

1-(1) Infrastructure (Communications Solutions)Net Sales and Operating Income of Each Segment

【 Full-year forecasts 】• In optical fiber and cable businesses, strong orders in North America

(rollable ribbon cable, connectivity, etc.), South America (solutions business) and Japan. Specialty fiber orders will also be strong.

• Orders of core optical fiber for customers in North America are recovering in Q2

• Optical cable productivity in North America is steadily improving• Digital coherent products will recover from Q2• Strong orders for network products in Japan (net sales will be

concentrated in H2)• Respond to higher raw material prices and soaring transportation

expenses by improving the product mix, reducing the cost of manufacturing and limiting expenses

【 Q1 results: Operating income compared to last year 】( + ) Increased revenue of optical cable in the North America, FTTH and

LAN solutions businesses in South America( + ) Improved productivity in the North America optical cable business( + ) Network products in Japan were solid

( - ) Shortage of raw materials, higher raw material prices and soaring transportation expenses

( - ) Temporary decline in the sales volume of core optical fiber to customers in North America

( - ) Lower demand for digital coherent products due to customer inventory adjustments

( - ) Increased depreciation expenses

*+8.5▲0.1


*+16.7 +4.7


■Orders for rollable ribbon cable in North America have been as planned■Although the improvement to production capacity was impacted by a shortage of raw materials,

steady improvements were made

Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar

FY19 FY20 FY21

Reducedoperating levels

due to COVID-19

Seasonal

factorsProduction capacity as of September 2019

ShipmentvolumesEffect of the

improvement

Impact ofshortage of raw

materials

Seasonal

factors

Changes in North America optical cable capacity and shipment volumes

Seasonal

factors

North America optical cables sales volume forecast

1-(1) Infrastructure (Communications Solutions)Net Sales and Operating Income of Each Segment

Status of optical cable business in North America

FY20 FY21

■ Rollable ribbon cable

20%30%


1-(2) Infrastructure (Energy Infrastructure)Net Sales and Operating Income of Each Segment

【 Full-year forecasts 】• Overseas submarine and Japan underground power cable projects

are expected to progress as initially forecast• Demand for the construction and wholesalers market in Japan will

continue gradually recovering. Expand sales of functional power cable and further reduce the cost of manufacturing.

• One-time evaluation expenses following the adoption of new materials ended in FY2020

【 Q1 results: Operating income compared to last year 】( + ) Overseas submarine and Japan underground power cable projects

progressed as expected( + ) Strong results at the subsidiary in China( + ) Demand for the construction and wholesalers market in Japan

gradually recovered

FY21_Q1 Results FY21_Forecasts


*+5.0 +0.5


*+4.1+2.9


2-(1) Electronics & Automotive Systems(Automotive Products & Batteries)

Net Sales and Operating Income of Each Segment

【 Q1 results: Operating income compared to last year 】( + ) Increased revenue following the recovery in the automotive market

( - ) Increased depreciation expenses on the investments for accepted orders

( - ) Impact of lower customer production volumes due to a shortage of semiconductor chips and resin, and soaring transportation expenses

( - ) Impact of lockdowns at some locations in Southeast Asia due to COVID-19

【 Full-year forecasts 】• Start production for new vehicle models and reduce the cost of

manufacturing• Measures will be taken in response to the higher transportation

expenses and logistics delays resulting from the port congestion and shortage of containers caused by the impact of COVID-19 (including building up safety inventory and continuing to strengthen the global supply chain)

• Pay attention to the impact on operations of the lockdowns at the company’s locations in Southeast Asia



*+7.3 +2.6


*+24.9 +7.0

*based on the old accounting standards:JPY 248.2 billionImpact of higher copper prices :Approx. JPY 44.9 billion


2-(2) Electronics & Automotive Systems(Electronics Component Materials)

Net Sales and Operating Income of Each Segment

【 Full-year forecasts 】• Demand for in-vehicle and electronics products is expected to

progress generally as initially forecast, and while steadily capturing the demand, further improve the product mix

• Flexibly control inventory volumes in preparation for customer inventory adjustments resulting from the shortage of semiconductor chips and the impact of COVID-19 at the locations in Southeast Asia

• Incorporated the risks based on the market uncertainties from Q2

【 Q1 results: Operating income compared to last year 】( + ) Steadily captured the recovering demand mainly for in-vehicle

products and electronics

FY21_Q1 Results FY21_Forecasts*based on the old accounting standards:JPY 63.1 billionImpact of higher copper prices :Approx. JPY 17.5 billion

*+18.4+1.1

*+22.0

+1.1


3 Functional ProductsNet Sales and Operating Income of Each Segment

【 Q1 results: Operating income compared to last year 】( + ) In the copper foil business, increased orders for copper foil for printed

wiring boards following the restoration of production at the Taiwan plant following the fire, and recovering demand for copper foil for batteries

( + ) Captured the demand mainly in relation to the booming semiconductor and data center products centered on tape for semiconductor process/ heat dissipation and cooling products

( + ) Started full-scale production at the new heat dissipation/ cooling products manufacturing location in the Philippines

( - ) Impact of soaring transportation expenses and higher raw material prices

【 Full-year forecasts 】• Demand for 5G and data center related products is exceeding

expectations• Continue to definitely capture demand in the markets with strong

growth• Limit the impact of soaring transportation expenses and higher raw

material prices by the above measures



*+4.3

+0.9


*+0.3 +2.7

FY2021 Q1 Results – B/S Summary


Tangible / intangible non-current assetsIncreased by 3.7 billion

Impact of increased / decreased CAPEXJPY ▲1.2 billionForeign exchange, impact of the new consolidationJPY＋5.4 billion

InventoriesIncreased by JPY 17.3 billion

Impact of higher copper prices Construction and other projects that are expected to be recorded as net sales in the future The increase of safety inventory in preparation for the risk of supply chain disruptions

Cash and deposits

Increased by JPY 2.9 billion

Increased the liquidity of cash on hand

NET interest-bearing debt

Increased by JPY 25.1 billion

(JPY 206.3 billion → JPY 231.4 billion)

（JPY billion）

End of FY20_Q4 End of FY21_Q1 Changea b b-a

Current assets 429.8 465.0 +35.2　Cash and bank deposits 84.4 87.3 +2.9　Notes and accounts receivable　　- trade and contract assets 191.9 200.5 +8.6

　Inventories 120.8 138.1 +17.3

Non-current assets 402.2 409.8 +7.6　Tangible fixed assets 246.7 250.3 +3.5　Intangible fixed assets 20.3 20.4 +0.1　Investments and other assets 135.2 139.2 +3.9

Total Assets 832.0 874.8 +42.8

Current liabilities 315.2 351.9 +36.7

Non-current liabilities 225.2 225.3 +0.0

Total Liabilities 540.4 577.1 +36.7Shareholders' equity 260.4 260.0 ▲ 0.4Accumulated other comprehensiveincome ▲ 0.5 5.7 +6.2

Net income attributable to non-controlling interests 31.7 32.0 +0.3

Total Net assets 291.6 297.7 +6.1

Total Lianbilities and Net assets 832.0 874.8 +42.8

Interest-bearing liabilities 290.6 318.6 +28.0

Capital ratio 31.2% 30.4% ▲ 0.8

NET D/E ratio 0.8 0.9 +0.1


■Results were generally as forecast, and there is no change to the full-year forecasts.

FY2021 Q1 Results - CAPEX, Depreciation & Amortization and R&D Expenses


（billilon yen）

a b c c-b d

CAPEX 12.2 7.6 7.2 ▲ 0.4 45.0

Depreciation andamortization 7.1 7.8 8.4 +0.6 37.0

R&D expenses 5.4 5.2 5.0 ▲ 0.2 22.0

FY21ForecastsFY19_Q1 FY21_Q1FY20_Q1 YoY

change

Thank you very much for your attention.

Appendix Segments and Business Divisions

Segment Sub-segment Business Division

Infrastructure

CommunicationsSolutions

Optical Fiber and Cable Products

FITEL Products

Broadband Solutions Business

Energy InfrastructurePower Cable

Industrial Cable & Power Cable Accessories

Electronics & AutomotiveSystems

Automotive Products& Batteries

Automotive Products

Batteries

Electronics Component Materials

Electric Conductor (including fine magnet wire)

Copper & High Performance Material Products

Functional Products

AT & Functional Plastics

Thermal Management Solution & Products

Memory Disk

Copper Foil


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FY2021 Q1 Financial Results

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